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2018 Proves a Bumper Year for PE Buyout Deals as Dry Powder Accumulates

January 08, 2019, 07:50 AM
Filed Under: Private Equity

The past 12 months marked the most active year ever recorded for private equity-backed buyout deal making, according to a new report from Preqin.

There were 5,106 acquisitions announced in 2018, the fifth consecutive year in which the number of deals exceeded 4,000. The year also saw the second-highest deal values since the Global Financial Crisis, although it remains some way off the heights seen in 2006-7.

A total of 5,106 private equity-backed buyout deals were announced through the year, an all-time record, building from the previous record of 4,829 seen in 2017. The total value of these deals also rose to reach $456 billion – this is close to the $460 billion seen in 2015, and may surpass it given that Preqin expects these figures to rise by up to 5% as more information becomes available. Nonetheless, 2018 remains some way off the all-time record deal values seen immediately prior to the Global Financial Crisis: 2007 recorded $700 billion in deal making from 3,877 deals.

“If 2017 was a year marked by record levels of fundraising, then 2018 was a year marked by record levels of deal making," said Christopher Elvin, Preqin's Head of Private Equity. "With dry powder breaking the $1 trillion barrier in 2017, some feared that there was too much available capital that might overheat the market and deter deal making. In fact, we have seen the opposite occur."

But Elvin said some doubt still remains. 

"Dry powder has kept climbing to $1.2 trillion, and fund managers and investors both still say that asset pricing is a concern. However, strong activity in 2018 may dampen these concerns, and 2019 seems poised to see deal activity climb further rather than slackening.”

Click here to view the infographic accompanying the report. 


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